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Mitsubishi Tanabe set to buy Medicago for VLP technology

The financial environment for development-stage vaccine firms has picked up in recent months. Life science stocks are hot, venture capitalists have renewed their interest in biotech and a host of big companies are on the hunt for startup vaccine makers with novel products and technology.

Medicago is the latest developmental vaccine maker to attract a bid. Japan's Mitsubishi Tanabe is poised to buy the Canadian company for its plant-derived vaccine technology. The Medicago board has unanimously voted in favor of Mitsubishi buying another 54% of the business for up to $172 million. Mitsubishi already owns a 6% stake in Medicago from a deal it struck in 2011 and will control three-fifths of the company if the takeover goes ahead. Philip Morris Investments will retain the rest of the business.

Like other biotech stocks, Medicago has enjoyed a strong start to 2013, with its share price rising more than 135% ahead of the Mitsubishi takeover being made public. News of the deal moved its stock higher still. Yet, like all development-stage companies, Medicago needs cash--last year its losses totaled more than $30 million--and it has welcomed the fiscal security Mitsubishi offers. "[The deal] secures the future of the company. As a biotech company without any revenue, the challenge was always to raise money," Medicago CFO Pierre Labbe told the Triangle Business Journal.

Now Medicago can focus on moving its virus-like particle (VLP) vaccines through clinical trials. Mitsubishi is already involved with several Medicago projects--the most advanced of which is a rotavirus vaccine--as part of a collaboration the companies began last year. The collaboration and subsequent takeover bid are part of Mitsubishi's efforts to develop its vaccine business. It has introduced a Japanese encephalitis vaccine and a 4-in-1 jab for polio, pertussis, diphtheria and tetanus in recent years. Like fellow Japanese drugmaker Takeda, Mitsubishi has inked licensing deals and takeovers to build a pipeline capable of carving out a niche in a sector dominated by vaccine giants like GlaxoSmithKline ($GSK), Merck ($MRK) and Sanofi ($SNY).

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US Department of Justice (DOJ) has a new "top area of focus" for 2013

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